When does a tenancy agreement become legally binding?

A tenancy agreement lays out all of the rights and responsibilities of you and your tenants. It’s an important document, as it sets out the nature of your landlord-tenant relationship, and the terms contained within it could be very important later if there’s a dispute.

But what if one of the parties involved wants to amend the tenancy agreement — or back out of it altogether — after it’s been signed?

In this article, we’ll explain when a tenancy agreement becomes legally binding in the UK (whether it’s a written document or not), and talk through the circumstances in which a tenancy can be terminated early by either party.

When does a tenancy agreement become legally binding in the UK?

Like any other legal document, a written tenancy agreement becomes a legally binding contract between the two parties as soon as you have both signed it. As a landlord, your signature represents your legal agreement to uphold all of the duties outlined in the document. And for the tenants, signing means they are agreeing to uphold their part of the deal too — most notably, paying rent.

This doesn’t mean that rent is due immediately or that tenants can move in straight away, as tenancy agreements can be signed in advance of their start date. The date the tenancy will begin should be clearly defined within the agreement.

What if there isn’t a written agreement?

It’s not advisable for either landlords or tenants to enter into a tenancy without a written agreement. That said, verbal agreements are just as legally binding as written tenancy agreements under UK law. Tenants and landlords are also protected by certain statutory rights whether or not there’s a written agreement in place — and even if the written agreement contradicts those rights.

Generally speaking, a verbal tenancy agreement becomes legally binding when a landlord accepts rent from a tenant and grants them access to the property, though naturally, the terms of such an agreement can be more difficult to prove in court if a dispute arises. If this does happen, documents such as text messages, emails or other informal communication between the tenants and landlords can be considered by a court as evidence of the verbal agreement’s terms.  

Can a landlord or tenant change their mind after a contract is signed?

Tenancy law in the UK has very strict rules on the ways in which an agreement can (and can’t) be terminated by either party — regardless of what’s written in the tenancy agreement. A tenancy can only be terminated in the following circumstances:

• Mutual agreement from all parties.
• Break clause conditions being met if the agreement includes one.
• The tenants giving notice according to the terms of the contract.
• The landlord serving a Section 21 notice (after the end of the term).
• The landlord serving a Section 8 (eviction) notice in the case of fault by the tenants.

If none of these conditions is met, the tenants are liable for the rent covering the full term of their contract, whether they are living in the property or not. The landlord is also responsible for fulfilling all of their obligations as outlined in the tenancy agreement.

What if the tenants haven’t moved in yet?

A tenancy agreement is a legally binding document as soon as it has been signed by all of the relevant parties. Usually, this is the tenant and the landlord, though it may also include a guarantor if the rental requires one. There is no cooling-off period for tenancy agreements, and tenants are liable for rent from the start date noted in the contract, whether they are living in the property or not.

Landlords are also obligated to hand the keys over to the tenants on the date the tenancy begins, and don’t have the right to change their minds after the contract has been signed. If you find yourself in this situation as a landlord, the tenants could sue you for breach of contract.

In some cases, tenants might try to negotiate ending the contract before it starts if there has been a significant change in their circumstances. This might be because they are no longer able to pay rent, or have been offered a job in a different city. However, landlords are under no obligation to accept such a request, and tenants are still liable for rent until an agreement has been reached. In this case, the tenancy normally ends automatically when the landlord finds a new tenant for the property and their tenancy begins.

In certain circumstances, tenants may also be able to ‘unwind’ their contract in the first 90 days after signing it. However, this is only possible when they only signed the agreement due to being misled by the landlord or letting agent (for example, being told that the property included a parking space, then finding later that it didn’t).

What should be included in a tenancy agreement?

Tenancy agreements should be easy to understand so that the rights and responsibilities of all parties are clear to everyone involved.

To avoid any misunderstanding or confusion, a tenancy agreement should include:

• The full names of the landlord(s) and tenant(s).
• The date that the tenancy agreement starts (and ends, if it’s a fixed-term agreement).
• The rental price and how and when it should be paid.
• When and how the rent will be reviewed.
• The deposit amount and how it will be protected.
• The circumstances when the deposit can be withheld.
• The property address.
• Any specific obligations of the landlord and the tenant.
• An outline of the bills payable by both parties.
• Whether the property can be sublet or have lodgers.
• Whether and how the tenancy can be ended early (break clause).

The tenancy agreement must be fair and comply with the law. Any clause that is not in agreement with the statutory rights granted to tenants under UK tenancy law is unenforceable in court — and could even render the whole document unbinding as a legal document.

Creating a tenancy agreement from scratch can be a tricky business, as you need to make sure it clearly outlines each party’s rights and responsibilities and that it is compliant with UK law. It could be a good idea to consult with a legal advisor for help creating your tenancy agreement, particularly if you’re letting a property for the first time.

Alternatively, you may want to consider using a lettings service. While many property investors are understandably deterred by the high fees and industry-wide reputation for poor service and lack of transparency, Proptech alternatives are changing the game for landlords and tenants alike.

At Home Made, we offer a hybrid service that uses innovative technology to reduce costs and increase transparency while providing the in-person services landlords want from their lettings service (e.g. accompanied viewings, market appraisals etc). Our full end-to-end tenant find and management services both include a legally binding tenancy agreement (as well as tenancy administration, property marketing and everything else you need for a hassle-free let) for a fraction of the cost of a traditional letting agent. Visit our landlords page to find out more.

Article by Annie Caley-Renn

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